PTCC Archive

21 August 2006

Dear Friends,

Summer is a slow time for our effort since the Legislature is not in
session, but the PTCC and the PCTA are still working hard on the school
property tax reform issue and have some news that’s worth sharing.

The Pennsylvania Coalition of Taxpayer Alliances now has 22 member groups!
The latest organizations to join in our effort are Taxpayers United Reform
Needed (TURN) from Venango County and the Owen J. Roberts Taxpayer’s
Association from Chester County. Welcome to our new members and supporters!
It’s great to see that the momentum for true property tax reform
is continuing to build.

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The PTCC website has been updated since the last newsletter. Please visit
the site at http://www.ptcc.us to see these items:

A new introduction and history has been added to the Act 1 explanation.
Go to “The Act 1 Farce” link to read it.

A new explanation of the Plan For Pennsylvania’s Future has been
added that summarizes the provisions of this plan for school property
tax elimination. Go to “The Legislative Solution” link to
read it.

Although it’s not new, the Act 1 Calculator is a must-see. This
user-friendly spreadsheet will calculate your total school tax liability
through 2010 under the provisions of Act 1. For most of you it will be
a real shocker! Go to the “Calculate Your Act 1 Taxes” link
to run or download this great tool.

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On August 16, Mike Faust interviewed me on the Newsmakers segment of
Feedback on WEEU, Reading. The show went very well and generated a lot
of interest from the listeners; Mike was a great interviewer and helped
me to get across the important points of our tax reform effort. Actualities
from the interview were also used by Len Carmen in the WEEU newscasts
later in the day. The PTCC website had 256 hits in the few hours following
the interview and the e-mail list gained 34 new subscribers. Thanks for
all of your help, Mike and Len! If you’d care to listen to this
sixteen minute interview, an audio file is available on the PTCC website
under the “PTCC Archive” link.

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There were some interesting newspaper items during the past few weeks,
the most notable being a front page piece in the Pottstown Mercury about
the PTCC and the PCTA. Our thanks to Brandie Kessler for this fine article.
Click here
to read it.

The Daniel Boone Taxpayers Association, a PCTA member, had a victory
of sorts over the Daniel Boone school board. They managed to force the
school board to rebate to the taxpayers a portion of the extra monies
it received from the state this year. Click here
to read about it in the Pottstown Mercury.

We’ve been saying from the start that the school property tax “relief”
in Act 1 was only a smokescreen to justify slot machine gaming. There
are two recently-published articles that emphasize this.

The first, from the Associated Press, was published in the Reading Eagle
on August 20. Click here
to read it.

Here are some examples of campaign donations given by various groups
that represent applicants for slot parlor licenses in Pennsylvania. These
donations were made in the period from January 1 to June 5, 2006, just
a little more than five months.

The recent enactment of Special Session Act 1 of 2006, the so-called
"Pennsylvania Taxpayer Relief Act," came as a disappointment
to taxpayers throughout the Commonwealth who are fed up with increasing
school property taxes.

When given the opportunity to tighten the "back-end" referendum
provisions that existed under Act 72 of 2004 (the previous law that was
to distribute the gambling tax revenues), the legislature instead broadened
the exemptions and enabled school districts with the power to circumvent
voter referendum and continue to increase spending without hindrance.

Like Act 72, this law represents a weak attempt at curbing school spending
through voter referendum. Certain proposed property tax increases that
exceed a district’s so called "inflation index," which
ranged from 3.9 to 6.5 percent in 2006, would have to be approved by voters.
While this sounds like an excellent solution, Act 72 gave taxpayers in
only one of the 111 participating school districts the ability to vote
on proposed tax increases.

The façade of voter control of school property tax increases is
twofold. First, the "inflation index" allows many districts
to increase property tax rates substantially without voter consent. The
"inflation index" varies by district and gives school boards
generous leeway to increase spending well above traditional measures of
inflation, without facing referendum.

Second, Act 72 provided ten spending exceptions for which school districts
could avoid voter referendum. These loopholes allowed many tax increases
to occur without voter input. In fact, 26 of the 111 school districts
that opted into Act 72 submitted budgets greater than the "inflation
index," but only one district was required to hold a voter referendum,
as all the others were exempted.

These flaws remain in the new legislation. A lengthy list of loopholes
and a hefty inflation index will allow districts to avoid the ballot box
and leave voters helpless in the face of major spending and tax increases.
Throughout the Commonwealth, property taxes will continue to rise and
further burden taxpayers.

In the State College Area School District, the new mandate started a
spending race. The school board’s effort to pass a $102 million
construction plan in advance of the implementation of referendum could
lead to bloated budgets for years to come. Why? Because paying off debt
that was incurred before the implementation of Act 1 is exempted when
future tax increases are considered.

The expensive proposal has created a massive public outcry, but the ultimate
decision is in the hands of State College’s nine-member school board,
not the taxpayers. If the building plan faced voter referendum, its future
would be uncertain.

Statewide, it appears that tax increases over the next three years will
far exceed any expected relief in 2008 or 2009. A 5 percent annual increase
in property tax rates — the average cap for school districts in
2006 — represents $1.5 billion in increased revenue from 2005-06
to 2008-09.

Many lawmakers from both parties — whether they voted for or against
the bill — acknowledge that Act 1 was a compromise, and that they
desired something more substantial. Yet taxpayers and homeowners will
continue to suffer until lawmakers give them real control over tax increases.

Pennsylvania’s school boards exercise far more taxation power than
their counterparts in other states. According to the Education Commission
of the States, Pennsylvania is the only state that places no practical
limits on the taxing and spending power of school boards. Yet Pennsylvania’s
only limit on local school boards is the new token referendum, which most
school boards will be able to avoid even while hiking property taxes.

The Pennsylvania Taxpayer Relief Act merely serves as a Band-Aid for
Pennsylvania’s property tax crisis. Rather than confronting increased
school spending, the recent legislation offers voter referendum with no
teeth and no way to control the spending explosion that is taking place
in our school districts.

Sound property tax relief in Pennsylvania will not become a reality until
school spending is substantively restrained by empowering taxpayers with
a vote on any and all tax increases. Only when we give control back to
the people who pay the bills will relief come to Pennsylvania homeowners.

Mary F. Yoder is a research intern with the Commonwealth Foundation,
an independent, non-profit public policy research and educational institute
located in Harrisburg.

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That’s it for today.

As usual, your comments, concerns, and suggestions are always invited.
Just send an E-mail to pataxpayers@gmail.com
and we’ll give you a prompt response. And please don’t forget
to spread the word to your friends, family, and acquaintances –
our grassroots movement keeps building and you can help by enlisting others
who are concerned about this growing problem that affects all Pennsylvanians.